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ONE Location

2011 Employer Healthcare Congress Self Funding Magazine

Four Leading Healthcare Conferences

One Exhibit Hall, 4x the Traffic Shared Exhibit Hall, Networking Lunches & Networking Receptions

October 26th-28th, 2011

Marriott Renaissance Schaumburg Convention Center Hotel

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TABLE OF CONTENTS

EDITORIAL Editor-in-Chief

Jonathan Edelheit

Assist. Editor

John Springer

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by Kevin Faherty

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Paying Full-Price for Medications is a Thing of the Past

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Facing Reality in 2011… It’s Your Job by Kevin Faherty

Tercy U. Toussaint

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TABLE OF CONTENTS

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LETTER FROM THE EDITOR

Rhetoric of Politics in Our Industry by Jonathan Edelheit

Employees Can Help 02 Your You Lower Healthcare

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MARKET BASED PATIENT CARE! by Ralph Weber

by Alex Piper

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OFFICE OF THE INSPECTOR GENERAL

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WHY CONSIDER OUTSOURCING COBRA? by Rich Glass, JD

Benefits for your Business by Glenn Brown & Marsha Brown

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How to Play the Hand for You and Your Employees by Jenni Aldred

14 Centers of Excellence Transplant Networks

by John Van. Dyke

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PEEK-A-BOO,I SEE YOU! by Kevin Connors

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PHYSICIAN SHORTAGE: FACT OR FICTION? by By Richard A. Longo

Copyright © 2011 Self Funding Magazine. All rights reserved. Self Funding Magazine is published monthly by Global Health Insurance Publications. Material in this publication may not be reproduced in any way without express permission from Self Funding Magazine. Requests for permission may be directed to info@SelfFundingMagazine.com. Self Funding Magazine is in no way responsible for the content of our advertisers or authors.


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EDITOR’S LETTER: Rhetoric of Politics in Our Industry

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normally try to stay out of politics. In fact isn’t that what everyone always tells you. Don’t mix politics or religion with business. This month I simply cannot sit on the sidelines anymore. Unfortunately, politics has become like reality TV. It is more about the ratings and drama than “reality.” Scenes are staged, some shows are scripted, and the producers edit films, switch up video and actually change the time sequence of events, solely for the purpose of making things look more dramatic and emotional. For those of you who don’t realize it, most things in Reality TV, are not really “reality.” Politics has truly become reality TV. It’s no longer about what is good for the people or what is right or wrong, or what the moral high ground is. It is now about positioning, drama, emotion with an end focus on only one thing, getting reelected. In Wisconsin and other states some Democrats went into hiding, some left the state to hold up voting indefinitely on Unions, one part of the legislation was requiring the Union members to pay for their own health insurance. Have we really fallen so low that politicians now go into hiding to hold up voting? Are we five years old again and playing hide and seek? Why is it that we are allowing our politicians to behave like children and take action that would never be tolerated as an adult or in the business world? Everyone is getting caught up in the drama and not calling for an end to it. I find other editorials in benefits magazines, blogs from people in the health insurance industry, focus on blasting one political party, or blasting Obama or democrats on Healthcare Reform. What is happening is they are all keeping your eye off the real game. They are just part of the show, keeping you distracted and emotional. Now that the Republicans have taken over the House of Representatives, do any of you really expect anything different? Do you see Republicans and Democrats working together and making change? Are you demanding change? Or are you trapped in the “reality” of it all.

Jonathan Edelheit

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Your Employees Can Help You Lower Healthcare Writen by Alex Piper

Over the last decade, the Employer Healthcare Industry has seen a couple of major developments. Major developments in the Healthcare Industry are fueled by their ability to lower overall costs and are primarily driven by the gatekeepers of patients. Clinics, hospitals, drug manufacturers, equipment manufacturers, and professionals such as doctors and nurses benefit more when healthcare costs increase, provided, of course, that demand is not threatened. This article is not a supply-bashing article so I want to point out that the healthcare supply chain has provided the market with many beneficial services and products over the years. These products and services have improved the overall health of the patient public by finding new treatments, cures and drugs for the many ailments that affect the market. But, all things equal, major developments in healthcare are of the cost-reducing variety and are fueled by those who stand to gain the most from the cost reduction, namely the plan owners, patients and other payers of healthcare. The first such development that

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comes to mind is Prevention. Synonymous with prevention is maintenance. The concept of prevention and maintenance was that if employees made doctor visits more often, potential serious conditions would be detected early and thus prevented from becoming full blown conditions. About fifteen years ago, the seeds of healthcare prevention and maintenance were planted. These seeds grew and bore full fruit in the late 1990’s and 2000’s with the emergence of HMO Plans. Whereas an explanation of HMO plans, their origin and proliferation is beyond the scope of this article, those of us familiar with the industry remember it as a time when basic healthcare benefits became more affordable. Doctor visits, prescription drugs, detection and diagnostic services went down in price. Of course, this price reduction occurred, because those


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services became more available. In other words, most healthcare plans made the services eligible, which in turn increased access, or volume. So, what the supply chain lost in per-visit revenue, they more than gained back in volume business. Therefore, as one would imagine, with both the healthcare supply and the healthcare demand being able to benefit from this prevention development, it persevered for a number of years.

bore full fruit in the 2000’s with the emergence of health and wellness plans. Whereas an explanation of Wellness plans, their origin and proliferation is beyond the scope of this article, those of us familiar with the industry remember it as a time when onsite services became more available. Similar to HMO plans, Wellness plans became more available because they resulted in a reduction of healthcare costs for the plan owner. Employees, who are the healthcare consumers, were asked to become more The second such development that comes to responsible for their own healthcare. Employers mind is Consumerism. About ten years ago, the seeds incented employees to take care of themselves. In of consumerism were planted. Those seeds grew and some cases, employers penalized employees for

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risky behavior. Employees could acquire financial compensation toward their share of healthcare costs if they engaged in certain behavior. For example, if they recorded their blood pressure a number of times each year. Another example is if they completed a healthcare assessment which was designed to target potential problems by identifying risks such as obesity or stress. There was an explosion of wellness organizations that were formed as a result of the demand the consumerism created. Employees everywhere were joining health clubs, watching their diets, getting their blood pressure checked and reading up on ways to avoid stress. Corporations, both big and small continue to search for ways to manage their healthcare costs. They negotiate rates with healthcare providers and with third party administrators. They aggregate their healthcare buying in order to leverage their position. All these efforts help to move the healthcare cost needle in the downward direction, but it’s time to move the needle down to the next level. The tool are full-time or part-time workers. They are also to achieve that downward trend is closer than most grouped by geographic location. Another way to group them is by work tasks. For example, employees employees realize. who perform secretarial work can form one group. Employers should start using their own However, the incentive to group employees, in employees to design actionable preventive and the past, has been so that the healthcare provider, maintenance for the total employee body. Employees whether it is the employer or an insurance company, represent as homogenous a group as exists. When can reliably set healthcare rates for that group. For one thinks of homogenous groups, one thinks about the purposes that this article intends, the incentive the Army, Marines, Flight Attendants and any other should now also include the reason that the employee group whose participants experience similar lifestyles groups can learn from each other. For each EHG, the and risk exposures. In a company, employees are as habits of the more healthy employees will become homogenous a group as can be found. Employers the standard to which the whole group will aspire. should tap into this resource in order to identify, An example of an EHG could be employees who are duplicate, communicate and incent the healthy parents. Another example of an EHG could be single behaviors that exist within this group. The following parent employees. The list could go on and on. The key to creating EHG’s is to identify common risk action steps are recommended. exposures BOTH on and off the job. Once this step First, identify Employee Health Groups is accomplished the next step can begin. (EHG’s). Most companies have already identified employee groups when they enrolled in their current health plan. Employees are grouped by whether they

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The next step for employers to implement in order to tap into the healthcare resource that their employees represent is to identify the habits of


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the healthy individuals within each EHG. Again, in order to enroll in the current healthcare plan, employers would have gone through some exercise of identifying health measures that they wish their employees to aspire to. The more common health measures would be, for example, doctor visits twice each year, semi-annual blood pressure check-ups, or periodic body fat composition analyses. Within each of the health measures, the employer would have established employee goals. Examples of the goals would be that a certain percentage of employees complete the health measure activity, or that a certain percentage of employees’ results of each health measure be within a certain value range. So, if the health measure is semi-annual blood pressure check up, then the goal could be that ninety (90) percent of the employees achieve normal blood pressure measurements at each check up. Once employers have established these health measures and their corresponding goals, then they can actually start establishing actionable steps to achieve the desired results. The third step in this endeavor is for employers to implement aids to assist the employees to achieve the goals. Corporations focus so much on what’s right and being politically correct that most solutions are just band aids in fancy colors, not actual solutions. Employers have to rely on employees to design the healthcare programs. Let me give you an example. Regarding the healthcare measure of employees incorporating exercise into their lifestyle, employers have gone to varying lengths. Some companies have negotiated discounts for their employees to become members at health clubs. Other employers have installed fitness gyms and even offered aerobics classes on site, for employees. I know of companies that have implemented longer work lunch periods or flexible work hours specifically in order to allow employees to engage in daily workouts. One employer addressed the needs of its black employees EHG. As most of us who are

knowledgeable about tangible healthcare statistics know, Black Americans suffer from increased levels of obesity and blood pressure when compared to their non-Black counterparts. In order to encourage the black employees at this particular employer’s organization, the employer encourage the black employees to conduct on-site “Hustle Aerobics” classes. These classes were basically black versions of aerobics classes. However, because they were led by black employees and because they targeted the black employees in the organization, they were very successful amongst that particular EHG. As a matter of fact, not only did that Hustle Aerobics attract the target market, but it also became popular amongst the broader employee base. This example represents a true success story and one that embodies the intent of this article. Of course, employers need to address the complications that can arise with the advent of such a plan as this article suggests. Complications like privacy issues, sentiments of jealousy, sentiments of favoritism and what actual lengths the employer should go to in order to gain optimum benefits. However, the decision to implement such an action plan is a first step that is bound to result in overall success. Remember, the healthier your employees, the lower your healthcare costs and the higher their output.

BIO: With over 17 years experience in Insurance, Marketing and Employee Benefits Management, Alex Piper possesses extensive knowledge of the U.S. Voluntary Benefits Market and the influence that Insurance Carriers, U.S. Employers, TPA’s, and Government will have on the next generation of voluntary benefits. You can reach Alex at Alex@ vbassociation.com

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OFFICE OF THE INSPECTOR GENERAL

Benefits for your Business Writen by Glenn Brown & Marsha Brown The Office of the Inspector General Act of 1978 (and amended in 2008) established a new position of accountability and oversight. The Office of the Inspector General is a dynamic, proactive and responsive position serving the American public. The major responsibilities include conducting audits, investigations, and other reviews and evaluations that are designed to detect and prevent fraud, waste and abuse in order to promote economy, transparency and effectiveness.

proactively with management and board members to improve operations and suggest innovative solutions that result in savings for your self-insured company or public entity. There are many advantages to instituting a Private Independent Office of the Inspector General program to support your self-insured corporation or public entity. In addition to the functions stated above, the PIOIG is the central point for coordination of and responsibility for protocols that promote accountability, integrity and efficiency within your company. An efficient company is a profitable company! Before we get to the profits, let’s discuss the terms. How do you recognize and tell the difference between fraud, waste and abuse?

The Office of the Inspector General Act requires the Office of the Inspector General to act independently and objectively. A Private Independent What constitutes waste? Waste is the Office of the Inspector General (PIOIG) works intentional or unintentional, thoughtless or careless

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expenditure, consumption, mismanagement, use or otherwise squandering of company resources. Waste also includes incurring unnecessary cost, because of inefficient or ineffective practices, systems or controls.

of work resulting from investigative service vendors who are forced to work at depressed fee schedules under the third party management allowable rates. As in all things, you get what you pay for. And often, what you’ll get is watered down investigation services resulting in a mediocre work product that Example #1: “Company A”, when assisting an will poorly support your compensability decisions. injured employee, will secure the first notice of The same holds true for other service providers. This claim, and then direct the injured worker to a medical is waste, pure and simple. provider. This medical provider may be of the company’s choosing, or it may have been selected by When Best Practices on adequate staffing the employee. The medical provider often consists become the company’s policy, that allows claims of a group of physicians with different specialties. examiners the time to professionally and efficiently Let’s say the employee injured his back on the job. handle their case load. The necessity to delegate Once he has been examined by the orthopedist, he is work to a third party oversight company becomes then referred to other specialists within the medical gratuitous, money is saved and profits are increased. group. He may be examined by a neurologist, a rheumatologist and/or a cardiologist. Each of these When does waste become abuse? Abuse doctors will submit an invoice to “Company A” for is the intentional manipulation, misapplication or examination and consultation. “Company A” may misuse of company resources, such as receiving routinely pay these invoices, even though there is favors for awarding contracts to certain vendors, no medical rationale for such varied and numerous making procurement or vendor selections that are examinations, given the nature of the employee’s contrary to existing policies (Best Practices), or are injury. The extra cost constitutes waste – but “that’s unnecessarily extravagant or expensive. Once abusive the way we’ve always done it.” “Company A’s” practices are identified, a program of Best Practices policy as described is certainly wasteful, but does should be introduced to management and staff. These not necessarily represent fraud or abuse. Best Practices should focus on implementation of a change in staff conduct that will create savings and This unnecessary economic drain is exactly profits for the company. The implementation of Best the type of situation a PIOIG can identify and rectify. Practices training must be monitored and measured A thorough investigation will uncover such wasteful – because what gets measured, gets done! A skilled procedures and issue a report to management and the and experienced PIOIG will evaluate your current board of directors recommending Best Practices. practices and recommend improvements designed to eliminate abuse. After a period of time, the company Example #2: “Company B” attempts to save money staff’s conduct should be measured against the Best by understaffing their claims department. As the Practices that have been implemented to ensure staff becomes overwhelmed, the management of compliance. “Company B” becomes convinced that the only way to manage the situation is to relegate service vendors, If staff conduct is still found to be deficient, such as investigators, to third party management. continued training must be immediately reinforced, When this situation occurs, the “Company B’s” and the Best Practices process should be repeated. shareholders and/or owners may become vulnerable Incentives and positive acknowledgement may be to substandard defenses, because of the poor quality offered in the form of time off or a financial bonus

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percentage of the savings or profits realized as a result of the implementation of Best Practices. Our experience serving as Inspector General has revealed that positive reinforcement is a powerful motivation for staff to comply with the new protocols. If, on the other hand, the same wasteful and unproductive practices persist, an investigation must be conducted to identify where, how and why the economic drain continues to occur. A Best Practice that has been proven very successful is to empower the claims examiner with a manageable case load of 125 to 175 cases per desk, along with the responsibility of direct management of that case load. We have found that when the case load delegated to the claims handlers is consistently excessive (more than 175 cases), a competing agenda often exists that is inimical to the company’s savings and profit agenda. Employees can be so overwhelmed that efficiency becomes vulnerable to “too much work and too little time.” In this circumstance, the company’s financial resources are not being used to properly staff the claims department with an adequate number of claims examiners. Senior management should be probed to determine the cause. Understaffing can result in penalties and missed deadlines, which can be very costly. Often, work is delegated to outside attorneys, who in turn, assign their in-house clerical staff to process the tasks at their standard attorney hourly rate. This can severely drain a company’s reserves to the point where business operations may ultimately be impacted to the point of failure. When understaffing or ineffective inhouse systems persist, even after being trained on Best Practices – it moves from being waste, to being abuse. And finally, what part does fraud play? Fraud can be defined as, “an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him, or to surrender a legal right; a false representation of a matter of fact, whether by words or by conduct, by false

or misleading allegations, or by concealment of that which should have been disclosed… with the intention to deceive another.” (Black’s Law Dictionary – Revised Fourth Edition) Example #3: In a redacted sample from an actual PIOIG investigation, “Company C” has more than 500 employees. A large portion of this work force has health insurance provided by the company. The universal reality is that health care costs have continued to increase dramatically, and this was definitely a cost driver to “Company C” that pays for a percentage of these benefits. In probing the systemic cause of this drain on the company’s savings and profitability, a Private Independent Inspector General disclosed that financial and healthcare data, as well as Social Security numbers, were being processed and handled by convicted criminals – because it was less expensive. These inmates were found to possess private citizens’ social security numbers inside their prison cells. Unfortunately, this is not an isolated example. This co-mingling of personal information, including social security numbers, with inmate access is a common practice and often results in theft and illegal

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sales of these critical assets. Proactively addressing this issue, United States Senator from California, Dianne Feinstein, sponsored Senate Bill S141, the Social Security Number Protection Act of 2010, which passed into law in December 2010. Public Law 111318 is designed to prevent prisoners from handling Social Security data.

the opposition’s legal team is coming with its “A List” service providers. Your company’s bottom line may be exposed to unnecessary losses, because of substandard information. It’s fraud when a third party oversight company represents the work of the actual performing vendor as their own, or when the fee charged to the client company is marked up higher than what was paid to the performing vendor - without disclosure to the client company. Fraud is also defined as “the means resorted to by one individual to get advantage over another by false suggestions or by suppression of the truth, and includes all surprise, trick, cunning, dissembling and any unfair way by which another is cheated.” (Black’s Law Dictionary – Revised Fourth Edition)

The situation described above is a pervasive fraud being perpetrated not only on “Company C”, but on many unsuspecting companies – perhaps yours. Unless the health care provider disclosed their use of inmates up front, and “Company C” agreed, this would constitute a deliberate and intentional perversion of truth – the truth that convicted inmates would handle sensitive medical and personal information (probably at pennies on the dollar of the quoted fee) in order to obtain an economic advantage over “Company C’s” Fraud, waste and abuse place a drain upon a profits – at high risk to “Company C’s” viability. company’s operational efficiency and profitability. It is to your advantage to have a Private Independent Office Example #4: Continuing the story of “Company B”, of the Inspector General (PIOIG) on your team, making the third party oversight company often represents sure that you are protected from the detrimental impact to the client company that the work product they are of fraud, waste and abuse. overseeing is the result of their own efforts, and thus, charges a higher fee schedule than the outside vendor About the Author service company who is performing the actual work. They may even put the work product on their own GLENN S. BROWN, J.D. is Chief Executive letterhead, without identifying the service vendor who Officer of Fu-Gen, Inc. Research and Investigation. actually performed the work. The service vendors are He has well over 34 years of experience in all facets paid at a much lower rate than the third party oversight of the investigation industry. He is directly involved in company charges you – their client. The ultimate result the following investigation areas: Inspector General of this fraudulent practice is that this unvetted service services, workers’ compensation (AOE/COE), fraud, vendor provides a substandard work product in order background checks, surveillance, sexual harassment, to make ends meet. corporate theft, and liability. A PIOIG would probe the difference between the fee charged by the third party oversight company MARSHA L. BROWN, M.A. is president of Fuand the actual cost of services rendered. What value Gen, Inc. Research and Investigation, a nationally does the third party oversight company actually recognized investigation corporation specializing in provide that the outside vendor service company does Inspector General Services, the elimination of fraud, not – and often at a much lower cost to your company? waste and abuse, transportation-related accident Where and to whom does the inflated fee go? Worse investigations, as well as workers’ compensation yet, when you reach the legal arena, you may find that investigations for self-insured corporations.

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The Cards Are Dealt:

How to Play the Hand for You and Your Employees Writen by Jenni Aldred To paraphrase Woody Allen, “managing benefits is like playing bridge. If you don’t have a good partner, you’d better have a good plan.” Health Care Reform along with other legislation implemented last year required— and continues to require—a significant effort for employers. The wide range of plan design and administrative requirements that need to be implemented and communicated comes with substantial cost—both in terms of the internal and external resources needed, and the attendant hike in premiums to accommodate such changes as the elimination of lifetime maximums, dollar amounts on preventive care, and the mandatory coverage of adult dependents. Some employers have even

gone so far as to eliminate or substantially reduce benefits in an effort to escape the requirements of such recent legislation (most recently, the Screen Actors’ Guild eliminated mental health coverage to avoid the requirements and cost of mental health parity). But the new legislation also offers a “bright” side: the chance to offer your employees meaningful benefit choices that create a true partnership. As we move ahead into 2011, most companies have already taken advantage of the golden opportunity to begin more open communications with their employees about their benefits – and, with good cause. A recent poll suggests that changes due to health care reform encouraged over two-thirds of employees, in recent annual enrollments, to review their

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benefit options more closely. And an equal number of employees are looking for ongoing communications concerning how legislative changes will continue to impact their benefits and associated costs. While some of the messages communicated—such as premium increases—may have left a bad taste in employees’ mouths, the focus now is how to show employees how actions can determine the impact new legislation will have on their benefits down the line.

So what can employers do? Leverage What Exists • 100% Preventive Care Benefits and Wellness. The legislative requirement to provide preventive care benefits at 100% is a perfect launch pad for creating a partnership with your employees. Because “prevention” is closely linked to “wellness,” use this focus on prevention to encourage employees to become accountable for their health and well-being. Social media venues– such as blogs, Twitter, and Facebook – enable you to keep your employees constantly updated on trends in prevention, newly covered preventive tests and diagnostics, and focused topics related to your population’s “pain points” with disease and illness (such as diabetes, high blood pressure, and heart disease). • “We’re Ahead of the Curve.” If you’ve never imposed a lifetime maximum on benefits or were already covering preventive care at 100%, let your employees know that the company has been ahead of the curve. This positions you as a company with its employees’ best interests in mind.

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• Don’t ignore non-medical benefits. Although recent legislation has scarcely touched these benefits, communicating these “employee focused” benefits is now more important than ever. According to a recent PPACA poll conducted by MetLife , “71% of employees who say they have a good understanding of health care reform also say that their nonmedical benefits are very important in driving their feelings of employer loyalty.” Make sure your employees understand the full package of benefits available to them—especially those that are provided at low or no cost. • Your 401(k) Program. In December 2010, President Obama extended the Bushera tax cuts, including a one-year reduction in workers’ Social Security taxes by nearly a third, from 6.2 percent in 2010 to 4.2 percent. Your employees will have more in their paycheck, giving you the opportunity to boost your 401(k) participation by encouraging them to redirect those funds to another form of retirement security—one they have control over. Look Ahead • Incentives, incentives, incentives. Although the Health Insurance Portability and Accountability Act (HIPAA) brought more attention to wellness programs and having incentives in place for employees who participated in these programs, the Patient Protection and Affordable Care Act (PPACA) will place greater focus on having this type of program in place by 2014. The law will permit rewards or penalties, such as premium discounts, of up to 30 percent of the cost of coverage – an increase of 10% of the total premium set by HIPAA. And, as premium rates continue to rise, being able to communicate


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to your employees that they have a chance to negate the increased cost with participation in a wellness incentive plan provides you a chance to shift priorities in health care from diagnosis and treatment to focus on prevention and wellness and move responsibility to your employees. Solidifying Your Partnership: If you already have a wellness program in place, investigate how to bring your incentives up to the current 20 percent of cost of coverage limit between now and 2014 – this will put you in a position to leverage the 10% increase in 2014 and offer your employees more ways to save. Be sure to communicate to employees the impact of participating and not participating in the program in terms of percentages added or subtracted from their current premium rate. • W-2 Reporting. As of January 2012, employers must report the aggregate cost of health coverage on employees’ W-2. This is an outstanding opportunity to show employees the “real” dollar value of their benefits. The true cost- sharing partnership will be evident, and employees will see the impact your contribution has to their pocketbook.

expansion of the internal and external review process adds another step to the Claims and Appeals process, it also provides an opportunity to provide an opportunity for you to communicate “one extra step” in place to protect your. . It also allows you to eliminate some of the “grey” area around adverse benefit determination. Solidifying Your Partnership: Treat this as an opportunity to communicate to employees the non-biased approach to your Claims and Appeals Process. Many employees think their employers are the “bad guy” in these circumstances. Recent legislation allows employers to provide employees with a more detailed, specific understanding of their options – once again, adding value by placing emphasis on employee-driven outcomes.

The administrative challenges associated with recent legislation are daunting. But, the security employees expect from their benefit programs—not to mention the loyalty they hope for in an employer—seem to put perspective on the task at hand. To paraphrase Woody Allen, planning is a good idea, but having a good partner is the first at hand. Make your choices Solidifying Your Partnership: Think with that partnership in mind. about incorporating a more effective disclosure of health-care cost information—such as a About the Author total rewards statement—into your current communications to employees. Incorporating Jenni Aldred is a Senior Project Manager/Writer total rewards statements as an integral part of for HighRoads, Inc. She joined HighRoads their employee communications, companies are with 12 years of communication consulting achieving higher returns on their investment in experience with Buck Consultants and their employees by helping them understand the Watson Wyatt Worldwide. Using her extensive overall value of their employment and the link understanding of new Health Care Reform between collective efforts and personal success. legislation, Jenni currently provides our clients with the information needed to navigate the • Expanded Review Process. While the changes occurring now and in upcoming years.

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Centers of Excellence Transplant Networks Health Insurance Reform Consequences: Bigger Carrots, But Even Bigger Sticks Writen by John Van. Dyke As a professional working in the transplant network industry for the last 16 years, I can see that healthcare reform has made the Carrots and Sticks consequences of transplant care more dramatic. For many health plans, getting a great transplant outcome was desired, but lifetime maximum insurance benefits protected the plan from those that did not. Every year health plans have transplant companies close cases because the member has exhausted their benefits, even though the member is still receiving intensive care. In today’s health reform world, the benefit of the good outcome (carrot) remains, but the lifelong benefit consumption of a bad outcome transplant (stick) is a new looming reality for health plans. Climbing the sales side of the industry, I was taught to sell the benefits of achieving the good outcome transplant. I can see myself closing a sales presentation: “There are so many benefits to the plan when a liver transplant recipient jumps-up out of bed after 7 days and returns home complication free. Billed charges are low for the transplant admission and low thereafter - this is the Carrot you seek. The COE carrot results from increased transplant competency through volume, tightened patient selection criteria and outcomes that improve yearly� says John Van Dyke, the young sales person. It gives me great joy to revisit the COE mantra. In this article, however, I want to explore the ever growing Stick side of transplant COE. Although the COE

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concept for transplant care has been around for nearly 25 years, and the benefits well documented, some insurance plan fundaments have created complacency within the industry. The two health plan conditions are: 1) reinsurance coverage; and 2) lifetime maximums. The payment of a complicated transplant is most often shared between the plan and their reinsurer. With a specific deducible at $500,000 (plan maximum exposure) and a lifetime maximum benefit of $1,000,000 (reinsurance maximum benefit) both parties enjoyed a limited risk of sorts.

on a positive note. With transplant volumes and surgical proficiency increasing at major transplant centers, the disruption is low and the outcomes good for the member and the plan. With many plans working to retain their “grandfather status� new benefit plan language is emerging which provides Centers of Excellence access as more of an Exclusive Provider Organization. Installing an EPO benefit for transplantation during this time of health insurance reform is appropriate. As a network, we receive a couple emergent heart transplants each year, and maybe an emergent lung transplant or two, but nearly all other referrals have ample time for thoughtful facility evaluation and selection. The most common method of program selection is by physician referral to the closest center to the member, which is often the pathway to low volume, poor outcome centers. For example, data gathered from 1999 through 2006 demonstrate that centers performing fewer than 10 heart transplants per year have about an 80% higher mortality rate in the first 30 days than the national average. People receiving a new heart at centers transplanting more than 40 a year have half the 30-day mortality rate of those doing 10 or fewer.

Transplant recipients with complications have been using plan lifetime benefits and much more for decades, but they ultimately become wards of the state, transition to Medicare and Medicaid plans or become charity care and part of the cost shift. Many recipients expire early from complications, but many are forced to live with medical intensive life-long complications. There is simply no data available to determine the incurred long term costs of a poorly done transplant. With disappearing lifetime benefit caps, recipients living with those complications will now become running liabilities of the plan. With transplant outcomes so readily available, and networks so well established, channeling for a good outcome/keeping transplants from occurring at poor outcome centers has never Considering the lifelong financial exposure been more important. of a poorly done transplant, and that the networks for controlling those risks are so readily available, When mulling over just how disruptive the time to implement a transplant COE EPO has putting in a COE requirement might be, you should never been better. take into consideration transplant frequency. Industry working numbers are 16.1 transplants per 100,000 covered members, so if you have About the Author 5,000 members in your plan, you should anticipate roughly 1.2 potential transplant candidates resulting For more information about topics covered in this in .8 transplants in any given year. article, please contact John Van Dyke at john@ interlinkhealth.com. Enough Stick side talk, so let’s wrap this up

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PEEK-A-BOO, I SEE YOU! Writen by Kevin Connors

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The year is almost 2011, and “homo sapiens” has attained evolutionary heights consistent with mere 24 hour interconnectivity, such that burbs in the western provinces of China register on social networking seismographs in Nova Scotia.

that the defending party’s discovery request intruded on the personal injury Plaintiff’s privacy rights, resulting in the defending party filing a Motion to Compel Plaintiff’s disclosure of the Plaintiff’s social networking profiles and addresses, so that the defending party could, within the context of the Pennsylvania’s Rules of Civil Procedure, investigate whether the Plaintiff had posted descriptions or photographs The point being, it is no longer your of activities that might be inconsistent with the smart phone, your laptop, the cloud that you are injury claims being made by the Plaintiff in the considering emigrating to, as it is that all of us personal injury lawsuit. now live in glass houses, filled with self portraits and convex mirrors.

“You talking to me, you talking to me?”

Yes, you are on Facebook, we know, originally only to connect with high school and college friends that you have not thought of in years, and you think it okay to stray from the Of course, that was Robert DeNiro’s claim or file in front of you, to run a quick social character, in the infamous Martin Scorsese Taxi networking search on whomever or whatever. Driver movie, talking to himself in a mirror, And, yes, we are all out there, all as the Facebookians among us sometimes are searching for whatever we think we need to search wont to do about personal things that in prefor, although the search engines are now busy social networking days would not even rise to the level of being fodder for polite reflections searching for us. in overcrowded elevators.

It is a Brave New World. The problem is, that the glass house is an invitation to look inside, as evidenced by the recent trial court opinion issued in McMillen v. Hummingbird Speedway, Inc., wherein Judge Foradora of the Jefferson Court of Common Pleas, was asked to rule on objections that a personal injury Plaintiff raised in response to the discovery requests of a defending party seeking Plaintiff’s social network information, such as the Plaintiff’s social networking IP addresses, with the Plaintiff claiming, as though it might mean something in the context of social networks that are anything but private,

In today’s digitally-driven social networking world, it is never how important the thing or event is, it is very simply that you have designated it important enough to make it public through the megaphone of Facebook, Twitter, or MySpace, which, at this point, probably has as many subscribers as this e-mail. Sifting through the Pennsylvania Rules of Civil Procedure dealing with issues of both discovery and privilege, the trial court blithely rejected every argument made by the Plaintiff, thereby overruling the Plaintiff’s objections to the defending party’s social networking

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discovery requests, and compelling the Plaintiff to produce this information, although the information ordered to be produced would still be subject, in any trial phase, to any and all evidentiary rules that might be applicable to authenticating the information for admission into trial. Although there are no appellate decisions of precedential significance in Pennsylvania on this issue, it is only a matter of time before there are, as there are other jurisdictions faced with similar discovery and evidentiary issues, with the general rule seeming to be, that fair is fair, and that if a litigant, represented or not, has chosen to go “public” through a social networking service, that information once “published” is no longer “private”, such that the information should and must be discoverable as being “public” for all of the world to view,

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whether limited to a defense counsel preparing for a personal injury Plaintiff’s deposition, or, perhaps, a jury hearing a personal injury case being presented with social networking evidence at odds with testimony offered by an injured party. Although McMillen is a decision that will resonate through the personal injury litigation universe, great caution must be exercised, whether in a pre-litigation claims investigation phase, or in a post-complaint discovery phase, that the party seeking the social networking information, must play by all applicable rules, and one rule that seems absolute, is that the parties seeking the social networking information cannot “friend”, directly or indirectly, the person from whom the information is being sought; to do so, not


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only violates the rules imposed by the social networking sites, which uniformly prohibit such activity, but such a search would also potentially render the sought-after information as invalid, and inadmissible.

protocols for seeking social networking information, to include formal social networking profile preservation requests.

The general rule that will likely evolve throughout all jurisdictions on this issue, will There are simply no excuses for breaching this be “ask nicely” and you “shall receive”. Be very simple rule. formal, thorough, and direct in asking for this information, and, under no circumstances, Practical Suggestions should you allow an objection or refusal to produce to terminate your search for the truth”. By all means, “seek and find” remain the operating principles upon which claims Assume further that you will receive no must be investigated, and lawsuits must be cooperation from the social network service/ defended. sites, as they are too busy making money to understand, let alone respond, to the importance With time still left on the game clock, you of how relevant these disclosures and posted will have many opportunities to seek out information on social network sites might be, and discover whatever information might be to litigants debating the propriety of privacy “public”. versus publication.

To do so, however, the following guidelines are suggested:

Keep in mind that the trial court’s overruling of the objections raised by the Plaintiff and McMillen should apply across • Strict adherence to all Rules of the board in any litigation, where inconsistent Civil Procedure, irrespective of jurisdiction, statements might be both relevant and applicable to both discovery and evidence; admissible. • Strict adherence to all jurisdictional About the Author decisional authorities, dealing with social networks; Since 1988, I have been representing employers and businesses in defense of workers’ • Strict adherence to privacy guidelines, compensation claims in Pennsylvania, and established by individual social network sites; I have, over the last 23 years, tried every conceivable type of workers’ compensation • Strict avoidance of any inappropriate claim. Over the years, I have published contact, using both common sense and the extensively on workers’ compensation practices generic rule of “how would I like it if they did and procedures, and in 2010, I was awarded an that to me?”; and, AV-rating by Martindale-Hubbell, the highest possible rating for professionalism and legal • Develop claims and litigation-specific ability.

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Paying Full-Price for Medications is a Thing of the Past Writen by Kevin Faherty There has never been a better time to help people afford their medications than in the current landscape of high unemployment and lost benefits. With over fifteen million unemployed and a total of nearly fifty million underinsured or uninsured in the United States, the crisis is quite evident. States are broke or headed that way. Obamacare may be taking its last gasp and government programs are cutting more and more benefits to people in need by the day. Small businesses don’t know where to turn for an alternative to the high cost prescription drug coverage they can’t afford for their employees. Programs exist that address this problem. The advent of the discount card has come of age. The number of people with insurance is declining and the need for alternative solutions is increasing. Perhaps for that reason, some of the major insurance companies began to embrace the concept of the discount card and began to explore

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the possibility of allowing their networks to be used for that purpose. These discount cards provide discount health, dental, vision and prescription products to the general public, regardless of age or income. Prescription discount cards are out there that provide discounts on average of 15% on brand name drugs, and 55% on generics. Over 80% of pharmacies accept the cards, including most major chains in the US and Puerto Rico. Dental discount programs often provide more savings than dental insurance and offer discounts not available with dental insurance, such as on cosmetic procedures. These discount cards are not affiliated with any one particular pharmacy. They offer an alternative to rising drug costs. Since the introduction of the Rx discount card, consumers have saved over $100 million in drug costs. The cards are free with no age or income requirements to meet. No FDA drugs are excluded and include diabetic supplies and smoking


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cessation products with a prescription. Many of the available cards never expire and can be used over and over again with no enrollment procedure or information gathered on the bearer of the card. When a doctor prescribes a drug it is for treatment. In order for a drug treatment to work, the patient should take the medication as prescribed. If the patient can’t afford the medication, they will buy and take what they can afford this month. Maybe next month they will buy and take the drug they skipped the previous month. Sadly, we all know that is not how their medication is to be taken, but the patient is only trying to make the best of it, struggling month to month. This is why hospitals, clinics, urgent cares, churches, counties, municipalities and State Departments are all now using these cards because the need to help people is overwhelming. The cards are offered free to the consumer. Discount cards and programs can be researched on the internet. Some card companies offer the consumer the convenience of just printing out a card, and using that paper copy at the local pharmacy. Pharmacists are happy to provide the discounts as it brings more people into their stores, and offers a way to assist those that would have had to pay full price for their medications.

About the Author Kevin Faherty, author, is President and CEO of National Benefit Builders, Inc. of Florham Park, NJ – Kevin is also the past president of the Group Insurance Association of New York and past president of the Mutually Preferred PPO network in New Jersey, a subsidiary of Mutual of Omaha. Kevin has spent 39 years in the group health insurance business.

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Facing Reality in 2011…It’s Your Job

A New Health Benefit Management Program Writen by Park Miller A new breed of health care management is making enormous strides in controlling healthcare costs. Healthcare activists across the United States are reporting savings of as much as 56% in healthcare expenses. Separate programs around county are starting to show success. Though independent from each other, each of these programs has several things in common. Each program gets its impetus from forensic analysis of medical claims and the use of intervention with the most costly employees (patients). The core of each of these programs is an ongoing physician-employee (patient) relationship, which is centric to all health initiatives (including wellness) education,

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provision of care, medical care coordination, coaching, informed decision making, and application through the entire continuum of an individual’s health.

Self-Funded Corporation, TPA’s and Brokers Are Well Positioned to Reach “Tipping Point” Although these programs are in their infancy, their potential to drive a true consumer driven healthcare system is inevitable. However, if the concept of such programs is going to reach a “tipping point” and become the practical answer to rising healthcare costs, corporate America and the self-funded healthcare industry need to take action. It is the author’s belief that corporate America, independent TPAs and the self-funded industry are ideally positioned


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today to lead the charge of this new breed of healthcare management. But, corporate America and the self-funded industry need to wake up and face reality before there will be any serious movement toward gaining control of healthcare costs. Jack Welch, former CEO of GE, spoke of “facing reality.” It was his opinion that facing reality is the hardest thing an executive staff will ever do. He also understood that leaders who avoided reality will have little chance of improving their business’ performance. His motto, “Change, before it’s too late” should be corporate America’s and the self-funded benefit industry’s wake-up call. American companies must face the reality that the current system and the enacted federal legislation will not yield the cost savings they desire. How much higher must our healthcare costs climb before serious action is taken on a large scale? How serious does the economic impact need to be before corporate America realizes how ineffective and self-serving the promoted solutions from the healthcare industry and the federal government are before taking action.

Creating a Powerful and Comprehensive Health Benefit Management Model

Although each of these new healthcare management programs represents only one or two management features, combined they create a powerful and comprehensive means for “health benefit management” (HBM) similar to the “prescription benefit management” (PBM) industry.

Cutting Healthcare Cost by 56% One innovative program showing success was developed in Camden, New Jersey. A healthcare activist group called the Camden Coalition of Healthcare Providers. The Coalition used forensic medical claim analytics to detect the most costly patients and created intervention programs that cut hospital admission by 56%. Savings reached $700,000 per month, while emergency room visits went from an average of 62 admissions per month to

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37, a 40% decrease. These savings were driven by an ongoing physician intervention program, consistently tackling chronic issues proactively, thus avoiding expensive crisis management in an emergency room. Safeway, another healthcare activist, implemented a number of health initiatives that kept their overall healthcare expenses at zero growth for a period of four years. A Wall Street Journal article about Safeway’s stunning results stated, “Market based solution can reduce the national Health-care bill 40%.”

employee risk assessment and personal history, advanced biometric screening and prescription drug database analysis. Once profiles are completed each employee is placed into one of four categories; most costly, chronic, early stage disease development, and low risk.

The comprehensive profiles and employee groupings provide the foundation for a company’s overall health initiative program, coordination of medical care activities, education, primary care panel development, intervention programs, coaching and advocacy efforts. Program implementation begins The Avivia Healthcare website reports by focusing on the employees who make that when patients are fully informed about up 70% of a health plan’s costs. Compare their health care options, approximately 30% of this comprehensive approach to other health them choose a less-invasive treatment and are initiative and traditional wellness programs subsequently more satisfied with their overall that implement less intense activities across the healthcare experience. Avivia relies on the entire employer workforce resulting in slow power of data analytics and the use of medical adoption rates and poor ROI. management and health initiatives throughout the continuum of care cycle for an individual. An initial focus on those employees It’s encouraging to see providers such as those that make up the large majority of healthcare in Camden facing their reality. They know plan costs does not imply that a Health that if they don’t embrace change someone Benefit Program ignores the remaining is going to do it for them. And the same will employer population. It merely underlines hold true for corporate America and the self- the importance of addressing the most costly funded industry. Remember Jack Welch motto employee first using intense health initiatives, “Change before it’s too late.” It’s better to medical care coordination efforts, education manage change toward your own goals than to and physician coaching. Secondary objectives have unknown change forced upon you. and the remaining employees are incorporated into the overall plan during the remaining Core Concepts of an HBM Model— implementation phase which can last up to six Focusing on Most Costly Employee months. An advanced Health Benefit Management (HBM) program should begin with a comprehensive employee profile developed by primary care physicians (panel) using a company’s medical claims database,

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The Power of Primary Care A well structured HBM program will include a highly trained panel of primary care physicians to manage general care, create


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health initiatives, provide education, wellness, coaching and coordinate all medical care. These activities are all geared toward empowering the employee-patient team to make better informed decisions about healthcare choices. The primary care panel will be heavily supported by the results of medical claims data analysis, followup biometric screenings, health initiatives and care coordination associates. There may be a need for outsource vendors to provide specific assistance. However, the total process must be managed directly by the primary care panel and employee. A well organized HBM program features financial incentives to use the primary care panel to overcome participation hurdles, a challenge faced by other health initiatives. The physician can then instill in the participating employee the importance of using their services as both coach and team leader for more serious interventions. Each primary care physician should be highly trained to provide the appropriate mentoring, research, and coaching as well as becoming a trusted advocate. NMD’s are a new breed of primary care physicians that are well versed in these concepts as well as providing a more holistic approach to the health process.

Traditional Health Initiatives and Care Coordination Will Become a Thing of the Past In the foreseeable future, advanced HBM programs will make all other health care initiatives, disease management programs and wellness initiatives a thing of the past. HBM programs reduce vendor program costs because their services are embedded in the medical care coordination routine, health initiatives and MD coaching activities. There still will be a need for some vendor services that are directly in support of primary care physicians. The HBM process should significantly lower per employee per month costs associated with these healthcare programs. There will be a shift in spending from unnecessary administrative and vendor costs to fees for provider services. In addition, this process will eliminate a disparate and highly disconnected system of care. These activities reduce administrative layering and filtering of information and lead to decreased stress levels for the employee-patient team and a better overall healthcare experience.

HBM Programs Should be Flexible in Pricing-Implementation and Management Management

As Health Benefit programs develop and mature, most companies will begin to make it mandatory for employees to visit primary care physicians for all health initiatives and coordination of medical care. Significant financial incentives and penalties will play a vital role in directing employees to the use of the primary care panel. Today there are companies that make it mandatory to complete biometric screening to maintain employment status.

Several health activist started HBM type programs using different components, yet each component yielded success on its own merit. This indicates that the HBM model has tremendous flexibility and will become an attractive feature for the healthcare industry as a whole to implement. TPA’s will be able to implement an HBM program for employers as a standalone program or as a complement

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rate increases? As I travel around the country, I am astounded by the mindset of corporate managers, health industry vendors, insurance brokers and healthcare providers. Most remind me when years ago General Motors and Ford executives told Americans with confidence that they knew what was best for consumers. That was just before the Japanese car invasion brought new product ideas to the American consumer. It took a complete collapse of the industry two decades later to affect a meaningful transformation.

to other health initiatives provided by an ASO carrier. HBM programs do not represent a one size fits all approach, but rather a collection of highly specialized components based upon each employer’s needs. Some employers and TPAs may choose to take on enhanced roles by internally managing certain components and outsourcing others, while others may wish to outsource all of the activities associated with a Health Benefit Management program. Because HBM programs can have standalone components, pricing structures are quite flexible and implementation follows stepby-step approach. Fees are phased in based upon the component being added. Virtually all traditional health initiatives are paid on a PEPM basis across all employees, but some HBM components can be paid for by only those employees using the service.

Facing Reality in 2011…It’s Your Job Are you ready to rally around what a health benefit plan can become or are you content with complacency and 20 to 30 percent annual

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Is your corporate health benefit plan, health care vendor, broker or provider organization any less married to an outdated business model than the American automobile industry was decades ago? Has your organization hit a brick wall with nowhere to turn to improve its health benefit plan, no more answers for your client’s as a healthcare vendor? Does your organization have another twenty years to wait before taking action? One only needs to watch the debates in Washington about healthcare to realize the time to face our reality has come. This debate has been going on long enough. It’s now up to the self-funded corporations, TPAs and the industry to face reality in 2011…It’s your job…Before it’s too late.

About Park Miller Miller is the founder and CEO of NuView Health Partners, Inc. Before founding NuView, Miller served in management roles in managed care organizations, Medicaid, PBM industry, TPA and hospital administration. He holds an MHSA degree in Healthcare Administration.


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Market Based Patient Care! will CONTINUE to rise at an unsustainable rate. Enacting health insurance reform without Health plans are addressing the cost of medical care, is like expensive because medical putting a new roof on a building which was in care is expensive. Will an earthquake. shopping across state lines for insurance fix that? It’s a Here’s how the Feds put the fix on nice sound bite, and will allow the insured to health care pricing. drop some of their own state mandates, but the biggest input to the cost of a health plan, is the It all starts with a Federal agency called underlying cost of the medical care financed by the Center for Medicare Services (CMS). They this plan. If you buy a plan in Shreveport, and set the reimbursement rates for some 14,193 use it in San Francisco, it will trend up in costs. medical procedures. How they come up with these figures is based on a “secret formula” calculated During the year-long healthcare debate, like most government methods of accounting. I did not hear ONE person ask why medical care Then CMS pays the AMA (American Medical is so expensive. They barely even asked why Association) to produce and manage “secret health insurance was expensive, but if 85% of codes” called Current Procedural Terminology the premium for health insurance must be paid codes (CPT codes). The AMA then sells these out in medical costs with the new medical loss codes to all doctors and hospitals, and insurance requirement, and we have not addressed the billing clerks. Altogether, they receive annual cost of medical care, then insurance premiums income reported to be $69.9 million, to manage Writen by Ralph Weber

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these codes. Insurance companies then use the reimbursement rates as a starting point in determining how much should be covered as an insurable benefit under the term, you no doubt recognize: “co-insurance”. In any business model where prices are fixed and paid by a third party, the patient (consumer) and doctor (provider) both have an incentive to consume more services than may be needed in order to gain maximum benefit. This is why these programs have become entitlements, rather than indemnity programs. If patients travel to Kansas for a bunionectomy or to New Jersey for a knee replacement, or Oklahoma for a Coronary Artery Bypass Graft, and you allow doctors and hospitals to compete across state lines, with their own rates, THEN you will achieve fair market rates, and sustainable costs. Each doctor and hospital has different costs for different procedures, and each medical provider includes different services with any given procedure. When a third party arbitrarily decides to pay Dr. X in Los Angeles the same as they pay Dr. Y in Miami, some doctors will be overpaid for certain procedures, and underpaid for others. Patients will receive “cost effective” procedures, which may not be what they really need. How many times have you turned on the TV and heard a vendor offer, “If you have Medicare, we’ll get it paid for, or you get your scooter free.”? Would you get one if you had to pay $25,000 of your own money? Take your car to a body shop and get an estimate to fix a dent. Then say: “oh, I forgot to mention, I have insurance”. The price will suddenly go up. This is because both the consumer and the provider are spending other people’s money.

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So how can we address the costs of medical care? By allowing doctors and hospitals to compete across state lines, not just insurance companies, and by having the patient see the true cost of the care, and direct their own care. A key element completely missed in healthcare reform.

rates” in the US to “paid rates” overseas. There often exists an added incentive for these brokers to send you overseas in the 20% to 80% or more that they get in kickbacks from the facility they send you to. These kinds of kickbacks are illegal in the US, so these brokers usually won’t refer you to a US facility. Deloitte estimates that by the year 2017 as much as $599.5 billion per year of medical care revenues could be lost from the US, in favor of overseas facilities. There is a very important place for overseas medical facilities in caring for US patients, but they are often not competitive on price. When US doctors and hospitals are permitted to set their own rates, they can usually compete very favorably with overseas facilities. A service such as MediBid.com allows patients to shop domestically as well as internationally, and define their own criteria for medical care. The status quo, and the reformed healthcare model lack transparency, as well as financial incentives for both provider, and consumer to reduce costs. In order to reduce costs while encouraging technological improvements, we need to introduce competition among doctors and hospitals.

About the Author Ralph F. Weber, President of MediBid, started an international health insurance brokerage in Canada, then moved to the U.S. and expanded his brokerage. Ralph has contributed healthcare reform policy to Rudy Giuliani and Mike In recent years, an industry known Villines. Driven by a passion for greater access as “Medical Tourism” has emerged, and is and transparency, Ralph and private investors projected to grow at an estimated 35% per year. started MediBid, a truly free-market solution to Medical tourism brokers send people overseas healthcare. with “promised” savings which compare “billed

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Why Consider Outsourcing COBRA? evaluating whether to outsource this important task. What should they look for in a COBRA “CAUTION! Handle administrator? With Care!” This warning is typically seen with Consider four factors in making this critical fragile packages, but it also decision to seek the assistance of a COBRA applies to an important third-party administrator (TPA): area of benefits law: COBRA administration. While COBRA is not 1. The TPA’s ability to provide a comprehensive, nuclear physics, its complexity has grown since IRS and DOL compliant program, especially 2008, and mistakes are not cheaply forgiven. with self-funded health plans Writen by Rich Glass, JD

The ARRA subsidy, the Health 2. The commitment to customer service Coverage Tax Credit expansion and more rules, 3. The level of technology to facilitate model notices, forms and court decisions have interactions between TPA and employer rendered the COBRA headache a serious health condition for many HR, insurance and benefits 4. The extent of indemnification protection should something go wrong professionals. As a result, more employers are

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1. A Comprehensive, Compliant Program The IRS uses the COBRA Examination User’s Guidance assistance for plan audits and examining compliance. Four criteria found in a Senate Report on COBRA often guide these IRS audits. This Report was for a law called the Technical and Miscellaneous Revenue Act of 1988 (TAMRA). The “TAMRA criteria” can indicate if the IRS will waive an excise tax of $100 per day for COBRA mistakes: • Training. The best practice is to designate the person(s) responsible for COBRA and ensure they are fully and properly trained. Once trained, the employer should retain evidence of this fact. They should have proper back-up. This “one sheriff-several deputies” rule applies well here.

a Health Flexible Spending Arrangement (FSA), a Health Reimbursement Arrangement (HRA) and self-funded medical and/or dental plans (common in the government sector). The premium calculation rules are founded on the simple COBRA concept of determining the premium based on the “total cost of coverage.” However, the methodology is difficult to understand, requiring calculations based either on reasonable actuarial estimates or past costs, adjusted by the Implicit Price Deflator as published by the Bureau of Economic Analysis. A competent TPA should be able to guide an employer through maze that is §4980B(f) of the Internal Revenue Code.

The tricky issues don’t stop with calculating the premium for self-funded health plans. Health FSAs may qualify for a limited offering of COBRA (or in some cases, no COBRA at all) if they satisfy a three-part test • Written Instructions. An employer that incorporates a HIPAA excepted benefits must have written procedures that are followed. test. Finally, how much coverage do you offer The TPA should be able to provide these when multiple Qualified Beneficiaries elect Health FSA COBRA? A good TPA should have instructions if and when needed. a ready (and correct) answer for all of these • Design and Updates. The COBRA questions. program must be designed based on competent professional advice. The advice should include 2. Commitment to Customer Service legal and actuarial resources. COBRA situations typically involve former employees who are upset about a variety • Monitoring. Independent auditors must monitor the program. They must be well versed of coverage and premium payment issues. A in COBRA law. Employers handling COBRA TPA should have a well-trained call center that answers the phone promptly and resolves issues in-house often miss this step. quickly and accurately. The call center should The importance of compliance is be open extended hours to allow Qualified increased when an employer is responsible for Beneficiaries to call outside of normal business one or more self-funded plans. Examples include hours and to accommodate those in other time

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zones. Secure web access to vital information is also helpful. HIPAA standards suggest that the optimal level of security for electronic data is encryption.

responsibility for its mistakes and will take appropriate corrective actions. Many TPAs insert a clause that limits liability to a low dollar amount or multiple of the monthly fees.

A TPA that promptly addresses issues with a sense of urgency can lower an employer’s risk of complaints to the DOL or of threatened legal action.

A 2006 COBRA case showed how messy indemnification disputes between an employer and TPA can be. In Linden v. Harding Tube Corp. and ADP, a COBRA coverage failure resulted in the TPA and employer each 3. Availability of Technology pointing the finger at the other. The only thing certain was the $62,000 judgment that one or An employer will usually retain some both of the parties would have to pay. role in the COBRA process. After all, the employer must report when a Qualifying In making the ultimate decision about Event occurs and what the plan’s premiums whether to outsource and to whom to outsource, are. A TPA should provide a variety of means fees and costs are a consideration. However, if for providing this information (e.g., electronic the above four factors are not fully in place, the data transmission, website, fax or paper). As decision to opt for the cheapest alternative may mentioned above, the electronic means should be a regrettable one. be fully secure and encrypted. In addition, a TPA should be able to provide a variety of activity reports, available through a secure website at About the Author any time. Rich Glass is Chief Compliance Officer The technology should have a robust and in-house legal counsel for Infinisource, reporting mechanism so that employers Inc., a third party administrator based in can use the needed information for other Michigan. Infinisource provides a variety of purposes. This might include insurance carrier administrative services – including COBRA, communications, payroll administration and Payroll, HIPAA, Flexible Benefits, HSAs, and eligibility management. Online Enrollment/Eligibility – for more than 15,000 employers nationwide.

4. Indemnification Protection

More information on Infinisource is available Accidents happen. When a TPA at http://infinisource.net accidentally makes a mess, you should count on the TPA to clean it up. Examine the indemnification verbiage in the service agreement to ensure that the TPA will take

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Physician Shortage: Fact or Fiction? A Look Into the Rumors of a Shortage healthcare reform, combined with an already stressed healthcare system, is making it a little So, you need to see a bit tougher for Massachusetts residents to access primary care doctor. You’ve healthcare. had a nagging lump in your neck that is causing concern Growing Shortage Concerns and you figure it’s time For years, the healthcare industry has to get it checked. After dialing your family physician, you’re told that you can schedule an been plagued with growing concerns over a appointment, but you’ll have to wait for almost potential physician shortage. Studies by different 2 months before the doctor has time to see you. organizations have reached forecast assumptions about what the shortage could look like in terms This is a scary scenario, but unfortunately of patient to doctor ratios. The lowest projection this is what some patients in Massachusetts from the Department of Health and Human are facing today. In 2006, the state legislature Services shows a shortage of over 65,000 by passed a healthcare reform that bears similarities 2020, while other projections have the shortage to the Obama administration’s recent bill. This upwards toward the 200,000 mark. Writen by Richard A. Longo

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Impact of Healthcare Reform President Obama’s signature sealed the Patient Protection and Affordable Care Act (hereafter referred to as the healthcare reform act). With that flick of the pen, the President introduced an additional 30 million patients into the healthcare system. This increase of just 4% has the potential to stress an already ailing system to the max. The question remains if our hospitals and primary care doctors’ offices are ready for the influx of patients.

Other Contributing Factors Aside from the healthcare reform act, there are other major factors contributing to the impending physician shortage. The “baby boomer” generation is quickly reaching retirement age, and with it, many physicians will be hanging up their stethoscopes in exchange for post-retirement vacations and other leisurely activities. According to the Association of American Medical Colleges, one-third of the active physician population is over the age of 55. The Pennsylvania Medical Society reported that in 2006, fewer than 8 percent of physicians in the state were under the age of 35. According to the U.S. Census Bureau, the trend from 1990 to 2000 in population growth showed an increase of 13.2 percent, representing 32.7 million people. Data from the 2010 census has yet to be released; however, there does seem to be a continued rise in the nation’s population growth rate.

What You Can Do

It is nearly impossible to tell if the predictions of the physician shortage will come into full

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bloom, and if they do, whether it will be as harsh as expected. Now, the question becomes, if a shortage rears its ugly head in the next few years, what, if anything, can you do to make sure that your employees are getting the care they need?

Educate Employees on Retail Health Clinics: The consumer world of healthcare has arrived, and it can be a viable option when urgent care is needed quickly. Even though retail clinics have been around for 10 years, many people are still relatively uneducated about their existence. Instead of visiting a physician office The answer is that, yes, you can be or the emergency room, your employees can pull instrumental in ensuring that you and your up to a Walgreens, MinuteClinic, or other retail employees stay covered. clinic to be seen by a medical professional, who is typically a nurse practitioner or physician Review Your PPO Network: Take assistant. another look at your PPO network to make sure that there is strong coverage for primary care While not much can be done by the physicians and urgent care facilities, such as general populations in terms of the broader hospitals. Make sure that this includes facilities medical care issues, every precaution and not only close to your office locations, but also strategy should be taken to ensure that your within close proximity to your employees’ home employees are able to receive care in an effective locations. If there is significant holes in your and efficient manner. network, contact your PPO networks to find out if they can negotiate contracts with facilities within the range that you want them. About the Author Find a Primary Care Physician: Encourage your employees to find a primary care physician as soon as possible if they do not currently have one. New employees, in particular, may not have a family doctor if they relocated for their job or if their former doctor is no longer in-network. Many physicians will stop accepting new patients if their patient load becomes too great.

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Richard A. Longo, RN, FACHE, FACMPE, possesses extensive and varied experience in healthcare management and strategy development gained through over 25 years in the healthcare industry. He is currently the Senior Vice President of Network Management for Devon Health Services, Inc., one of the largest regional PPOs in the Northeast. Richard can be reached at rlongo@devonhealth.com.


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Self Funding Magazine March 2011

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